Green Brick Partners, Inc. (GRBK)

[Enterprising Investor]

Surge of California companies to Texas expected to continue (11/20/15)

By Bill Hethcock

The Dallas Regional Chamber has helped lure 70 corporate headquarters to the region in the past five years, with 62 of the newcomers moving from out of state, including 35 from California.

Dale Petroskey, chamber president and CEO, doesn’t see the wave of incoming companies slowing.

“Success always begets success,” Petroskey said at a recent economic outlook luncheon in Dallas. “A lot of other companies are circling our area right now.”

Petroskey’s comments came the same week as a study indicating roughly 9,000 California companies moved their headquarters or diverted projects to out-of-state locations in the last seven years. Texas in general, and the Austin and Dallas areas specifically, have been prime beneficiaries of the corporate move-outs and out-of-California expansions.

Japanese automaker Toyota’s decision to establish its North American headquarters in Plano is an example of the activity in the study. The bulk of the roughly 4,000 jobs transferred to Plano will come from Torrance, California.

Petroskey said companies such as Toyota attract attention when they relocate, sparking interest from other companies.

Companies leaving California typically experience operating cost savings of 20 to 35 percent, said the study’s author, Joseph Vranich. Texas is an especially popular choice because of its business-friendly environment, said Vranich, a site selection consultant and president of Irvine, California-based Spectrum Location Solutions.

“It’s easy to do business in Texas,” Vranich said. “A lot of people say, ‘Oh, it’s the incentives, or the taxes, or the lower electrical rates.’ All of that is true, but the No. 1 theme is it’s easier to do business in Texas.”

Besides higher taxes and more regulation in California, lifestyle considerations, such as the ability to own a home, are another reason people leave the Golden State for Texas and other lower-cost states, Vranich said.

“When you say ‘lifestyle,’ and you’re talking about California, you think of Malibu and the beaches,” Vranich said. “But lifestyle means many things. If you want to buy a house and you earn only $60,000 a year, you can’t buy anything in the Los Angeles area that’s worth living in. But you can move to many areas of Texas, including the Dallas area, and buy a small mansion.”

Vranich said the Dallas Regional Chamber is one of the top economic development agencies in the nation, along with those in Phoenix and Pittsburgh.

Vranich’s report found that Texas ranked as the top state to which businesses migrated, followed by Nevada, Arizona, Colorado and Washington.

The Austin-Round Rock-San Marcos metro area benefited the most from California disinvestment events, followed by Dallas-Fort Worth-Arlington, Phoenix-Mesa-Scottsdale, Reno-Sparks and Las Vegas-Paradise.

http://www.bizjournals.com/dallas/print-edition/2015/11/20/surge-of-california-companies-to-texasexpected-to.html